In any economy, it is expected that the government will have a certain amount of debt due to not having the required amount of money to cover allotted expenses within a short period of time. In fact, some debt is actually encouraged because it gives the government the opportunity to invest for future infrastructures and programs, and it is expected that it will be paid off by the surpluses collected from them. However, there is still some debate over how much debate can be considered ‘acceptable’ per se (Johnson & Kwak, 2009).
In spite of all this, there is one thing most economists can agree upon: that the debt situation of the USA is a serious problem and thus needs to be addressed. For one, debt will increase the taxes collected from the citizens so that some of the debt might be paid off. In addition, benefits and the like have to be cut off leading to worse situations such as unemployment, which will further exacerbate the situation in general (Kestenbaum, 2011).
The first thing that will go away if the US government paid off its debt is that the bonds that the government has issued will disappear, which can be seen as a bad thing because US bonds is an important facet of global economy. In short, paying off the debt will solve some issues in the short term but it will have less than good results in the long run.
It is generally recommended to use both budget cuts and increasing taxes in order to solve the national debt. On one hand, citizens do not want too many taxes imposed on them as it decreases their income; on the other hand, too much budget cuts will decrease potential revenue and productivity of the economy in general. To minimize the impact of both, utilizing both is highly encouraged.
At first glance, it may seem logical to impose more taxes to wealthier people as they have more money to spare. However, they also have a higher rate of living so in the end they get to expend the same rate of tax as any other citizen. Basically, the tax imposed on citizens should be proportional to the amount of services they get from the government. If the rich get to enjoy a wider range of services from the government than the average person, then it is only fair that they should pay more taxes.
The national debt has become a major political issue because it is higher than before, and it will continue to increase over time. If this is not resolved enough, the economic status of the USA will eventually collapse.
Yes, I believe that the government has the responsibility of maintaining stability of the economy. However, it takes more than the government to fix the issue of our economy as it is a complex issue which involves many facets and fields.
A good way to deal with unemployment is to enforce policies that actively reduce its rate such as subsidies to employment and giving tax breaks to firms so that they look for more workers (Pettinger, 2011).
The Tea Party has some good points regarding with balancing the budget would alleviate the government problems, but only it is to a slight degree. Many other solutions should be implemented as the economy problem is multifaceted that can only be solved by a combination of solutions rather than just one.
References
Johnson, S. & J. Kwak (4 February, 2009). National debt for beginners. Planet Money. Retrieved from http://www.npr.org/templates/story/story.php?storyId=99927343
Kestenbaum, D. (20 October, 2011). What if we paid off the debt: The secret government report. Planet Money. Retrieved from http://www.npr.org/sections/money/2011/10/21/141510617/what-if-we-paid-off-the-debt-the-secret-government-report
Pettinger, T. (14 Nov 2011). Policies for reducing unemployment. Retrieved from http://www.economicshelp.org/blog/3881/economics/policies-for-reducing-unemployment/
